All the buzz this week seems to be about top grossing/top ranked law firms matching each other — and besting one another — in starting salaries for associates and in associate bonuses. It is all about what Cravath is doing, what Milbank is doing …. and the beat goes on. Frankly, I am tired of reading about it because it affects so relatively few.
Statistical Research Department has reported that approximately 35,000 law students graduated across the US in 2022. I think we can assume that approximately the same number graduated in 2023, although that number was not readily apparent from my research.
That is a lot of new law school graduates, and more than 50% of them typically start practice at law firms. So, let’s say that 17,500 new law graduates are practicing in law firms as I write. That is still a lot of new associates.
And let’s also say that the top 50 law firms with annual revenues between $6 billion and $1.2 billion are fighting over the top graduates of the most highly ranked law schools in the country. I guess that, with those annual revenues, they can afford to raise starting salaries to $225,000 — which is exactly what the top firms are doing —- and more if you add the increase in yearly bonuses.
It is obvious from these numbers that there are plenty of top law school performers to go around and service these top law firms. However, as noted in my blog last week, the important question is whether the law firm managers and executive committee members of those firms understand the consequences of that kind of salary increase in terms of the high price that associates will pay. Law firms do not give out that kind of money without exacting demands like more billable hours — which, when added to the current billable hour requirements, will likely result in more associates on shrink’s couches demonstrating signs of depression and career choice remorse. Your guess is as good as mine about how that will affect future recruiting.
And also consider the stress that it puts on second tier law firms trying to compete.
One legal industry expert was quoted on Above The Law today as stating that, while elite firms with high profits will be able to match these compensation increases, others will have a very difficult time doing so. That is easy to believe when you consider that the following factors — inflation, recession, war, and interest rate hikes —conspired to create a difficult business environment in 2022, and that the profession has not bounced back yet. Work at the associate level is still down, and it likely will be for awhile.
So, I say enough already. Let’s hear about something else. For example, let’s hear about law firm reforms to meet the circumstances of today rather than more about money. There are a lot of issues to address that affect young lawyers —- even those who do not meet the criteria for these huge salary hikes. Most of them are very capable with promising futures, and they deserve information that is relevant to them and, like me, they probably are tired of reading about issues affecting only the elite.
